CMS Suggests Significant Changes to Medicare Part D and Medicare Advantage Prescription Drug Plans


  • The Centers for Medicare and Medicaid Services, CMS, recently issued a Proposed Rule that would initiate important changes to prescription drug plans under Medicare Part D and Medicare Advantage. Comments can be submitted through March 7, 2014.
  • Among the changes CMS proposes are those concerning the criteria for protected drug categories, the costs to Part D enrollees and the government delivered by preferred pharmacy networks, and methods of targeting fraud and abuse by prescribers.

On January 6, 2014, the Centers for Medicare and Medicaid Services ("CMS") issued a proposed rule, "Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs," (the "Proposed Rule") with public comments due by March 7, 2014.

The Proposed Rule would bring considerable changes to Medicare Part D and Medicare Advantage prescription drug plans. Most significantly, the Proposed Rule would modify the criteria for protected "drug categories or classes of clinical concern," require preferred pharmacy networks to deliver lower costs to Part D enrollees and the government, and target fraud and abuse by requiring prescribers to enroll in Medicare in order for their prescriptions to be covered under Part D.

Categories or Classes of Clinical Concern

The Medicare Modernization Act ("MMA") required Medicare Part D plan formularies to include "all or substantially all" drugs falling within six "protected" classes of drugs — immunosuppressants, anticonvulsants, antineoplastics, antidepressants, antipsychotics and antiretrovirals. The Affordable Care Act ("ACA") subsequently codified this policy, allowing CMS to specify criteria for identifying protected classes through notice and comment rulemaking.

In the Proposed Rule, CMS indicated that it will continue to require formulary inclusion of all drugs within the antineoplastic, anticonvulsant, and antiretroviral drug classes, but would no longer require all drugs from the antidepressant and immunosuppressant drug classes to be on Part D formularies. Moreover, while CMS also anticipates removing the requirement on antipsychotics, "they will remain protected at least through 2015" to ensure that CMS has "not overlooked a need for any transitional consideration."

Preferred Pharmacy Networks

Over the past several years, CMS has expressed concern about preferred pharmacy networks. Specifically, CMS suggested that these networks may not consistently lower costs and noted that, in some cases, costs in preferred networks are higher than non-preferred networks.

The Proposed Rule would allow Part D sponsors to reduce copayments or coinsurance for preferred pharmacies only if they offer consistently lower negotiated prices than are available from other pharmacies in the broader pharmacy network. Further, CMS wants to modify the definition of "negotiated prices" to require all price concessions from pharmacies to be reflected in negotiated prices. Practically speaking, CMS asserts that "this would mean that whatever pricing standard is used to reimburse drugs purchased from network pharmacies in general, a lower pricing standard must be applied to drugs offered at the preferred level of cost sharing."

Physician Fraud and Abuse

To help control fraud and abuse, CMS proposes to require that all prescribers of Part D-covered drugs be enrolled in Medicare as a condition of coverage for those prescriptions. Moreover, the Proposed Rule suggests that CMS be authorized to revoke a prescriber's Medicare enrollment if CMS discovers a pattern of prescribing Part D drugs that threatens a beneficiary's health and safety. Additionally, CMS would be authorized to revoke a prescriber's Medicare enrollment if the prescriber's state license or DEA certificate of registration is suspended or revoked.

Additional Proposed Changes

In addition to the above changes, CMS offers the following through the Proposed Rule:

  • U.S. Citizenship Requirement: The Proposed Rule would require U.S. citizenship and lawful presence as an eligibility requirement for enrollment in Medicare Part D or Medicare Advantage plans.
  • Enhanced Risk-Adjustment Data Validation ("RADV") Process: CMS proposes to combine the medical record review-determination and the error rate calculation appeals into a combined process.
  • Expanded Data Sharing: The Proposed Rule would give "legitimate researchers" (i.e., non-commercial researchers) broader access to healthcare data by expanding access to various identifiers contained in the prescription drug event ("PDE") data.
  • Limited Plan Options Per Service Area: CMS proposes to limit prescription drug plans sponsors to offering no more than two Part D plans in the same service area.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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